California is reported to have a budget deficit of about $26 billion, which is largely due to excessive spending and lack of discipline. In a move to cut down unnecessary expenditures and increase state savings,  Governor Arnold Schwarzenegger has proposed and signed a new budget which has resulted in deep cuts across several state programs.

The new proposed budget while not increasing taxes, much to the joy of the anti-tax coalition, has proposed serious cuts many vital sectors of government. So who are the biggest losers of this deficit package? Well, for starters, major losers are those into child welfare programs as they have suffered a cut amounting to $80 million. Second in line is the health care system of the State of California, Medi-Cal, which has taken a cut of about $61 million. A close second to that is the AIDS prevention and treatment program facing a cut of about $52 million. Other areas heavily hit in relation to expenditure include low cost health insurance programs for poor children which faced a $50 million cut, welfare recipients, state parks, and of course public education.

Many feel that these cuts will be detrimental in the long run as these are essential services. There are many within the political circles who feel that these cuts are not to bridge the deficit gap but to ensure that California pays its debts on time so as to maintain its credit ratings. For its part, the government has been doing what it can to increase revenue but is facing problems with the present recession, as spending is at an all-time low and all major markets including real estate are going through a severe slump.

Whether this move will actually benefit the State of California or not remains to be seen. However, the government is confident that these measures will definitely work, maybe not overnight but definitely over a period of time.